In the wake of the global push for manufacturing resurgence, governments worldwide seem entranced by the allure of factories as a panacea for a myriad of societal ills. Whether it is President Joe Biden committing trillions to make America the manufacturing capital again or rising powers like China and India bolstering their industrial sectors, the consensus is clear ~ manufacturing holds the key to solving climate change, job loss, geopolitical strife, and economic stagnation. However, the prevailing narrative raises crucial questions about the efficacy of such investments and the veracity of manufacturing as a cure-all. A “good manufacturing job” once provided decent wages, job security, personal autonomy, and career progression. However, the landscape has shifted dramatically. Automation and technological advancements have reshaped the nature of manufacturing jobs, with factories becoming highly automated and requiring more specialised skills.

The idea that pouring trillions into manufacturing will bring back the golden era of stable, well-paying jobs seems increasingly unrealistic. Moreover, the traditional belief that manufacturing fuels innovation and economic growth is under scrutiny. While developing countries historically benefited from the reallocation of labour from agriculture to manufacturing, the complexity of modern supply chains, as seen in the iPhone production process, makes replicating this path challenging. Economic historians question whether state support for manufacturing played as decisive a role in development as commonly assumed, highlighting the importance of productivity growth in services and the removal of protectionism.

The argument for manufacturing’s role in innovation also comes with caveats. While manufacturing firms may have dedicated research and development departments, the emphasis on innovation spending in manufacturing overlooks the innovative potential within the services sector. The interplay between industry and services is vital for fostering technological progress, as evidenced by tech progress in places where both coexist. As governments commit staggering amounts for the green transition, it is crucial to scrutinise where these funds should be directed. While investing in critical minerals extraction and refining is essential, the assumption that more physical goods are needed for a net-zero emissions future requires careful consideration.

The world will need to replace the entire capital stock dependent on fossil fuels, but the complexity and risks involved in such endeavours warrant a nuanced approach. The final argument for increased manufacturing investment revolves around national security and the need to reduce dependence on foreign supplies. The recent example of supply disruptions during and after the Covid19 pandemic is cited as evidence of vulnerabilities.

However, market economies have a natural capacity to adapt to limitations, and greater self-sufficiency might make countries more vulnerable to future shocks. While the manufacturing mirage continues to capture the imagination of global leaders, the complexities and uncertainties surrounding its revival demand a re-evaluation of our priorities. Instead of funnelling trillions into a nostalgic vision of manufacturing’s past glory, perhaps it is time to explore diverse and innovative solutions that address the current and future challenges facing humanity